The Conservative manifesto reaffirmed a commitment to cut net migration to less than 100,000 a year. Employers will have to pay a £2,000 levy to hire a skilled worker from abroad, and an end to freedom of movement from the EU will ultimately make it difficult to recruit skilled and unskilled labour from any other country. The target is arbitrary, costly and an act of economic self-harm, says Rachel Marangozov. It will worsen the recruitment crisis in the NHS at a time when the UK is close to full employment.
When most targets are repeatedly missed, there is usually cause for a rethink – or, at the very least, a pause, particularly when that target has been an arbitrary one and lacked a clear rationale.
Not so, it seems with the government’s net migration target, which has been reaffirmed in the Conservative manifesto with as much enthusiasm as when it was first announced. Having consistently failed to reduce net migration to the tens of thousands for the past six years, the government believes that this has simply made the target more necessary than ever.
But pursuing it will come at a cost.
Key sectors in our economy are dependent on skilled migration and would struggle to find UK workers with equivalent skills. For example, around 8% of those working in the IT, software and computer services are non-EU migrants, and around 7% of all those working in banking and financial services are EU migrants. Not withstanding the need to upskill British workers to take up these roles in the future, it is clear that this won’t happen overnight. It takes time. And in the meantime, vital sectors of our economy, such as higher education and IT, will pay a higher levy to recruit skilled workers from abroad. The cost to a small business or even a large university of having to pay £2,000 for every skilled worker it needs, whether they are Indian IT workers or US professors, will only be seen as punitive. Employers already have to pass the Resident Labour market test before recruiting skilled migrants from abroad, demonstrating that no UK workers could be found for the vacancy.
Even in low-paid sectors, such as hospitality and agriculture, the economic costs of reducing net migration are significant. For example, 10% of all workers in manufacturing and 14% of all workers in accommodation and food service are from the EU. Importantly, these workers are not as disposable as some politicians like to make out. Our tight labour market and record levels of employment mean that there simply aren’t hoards of jobless Brits queuing to take up these jobs.
There are costs to our public services too – not least the NHS, which is heavily dependent on skilled migration and already overstretched. Even if an NHS trust were able to pay £2,000 for each of its Filipino or Indian nurses, it is unlikely that that money would then go into reinstating nursing bursaries to grow a domestic workforce of British workers. And even if it did, what are NHS trusts supposed to do in the 3-4 years it takes to train these new recruits? In previous years we have been able to go to Europe to source doctors and nurses as immigration rules on non-EU migrants have tightened. But Brexit will put an end to this.
The government has hinted at a transitional period, post-Brexit, that could help mitigate an imminent shortage of EU workers in key sectors like the NHS. They have also suggested that some sectors, such as agriculture, will continue to access the labour they need, perhaps through some preferential migration regime for EU nationals or short term /seasonal visas. But Brexit negotiations have barely begun, and neither plan would reduce net migration to the tens of thousands.
Indeed, it is highly questionable whether the target is achievable at all, even if we see an end to free movement. In the year to September 2016, immigration was an estimated 596,000; shaving an estimated 100,000 students off this and even the 268,000 EU migrants that we saw in that period would still leave 257,000 non-EU migrants and 71,000 British citizens. With 323,000 emigrants, that still leaves net migration well above the tens of thousands. And any cuts to non-EU migration could well be cancelled out by looser visa restrictions that accompany potential trade deals with countries like Australia and India.
The preoccupation with numbers overshadows the more important question of whether the target is even desirable. There are the financial and administrative burdens to business and the Office for Budget Responsibility has estimated that hitting the net migration target by 2021 would cost about £6bn a year.
This is a target that yields no winners. If it is reached, it will constitute an act of economic self harm; if it is missed again, it will further undermine public confidence in the government’s ability to manage migration effectively, and will encourage popular resentment towards migrants.
This post represents the views of the author and not those of the Brexit blog, nor the LSE.
Rachel Marangozov is a Senior Research Fellow at the Institute for Employment Studies and a Fellow at the LSE.
Also by this author: How will Brexit affect the NHS? The English trusts that depend most on EU nurses